Weir Group equipment orders surge as cost-cutting continues

Mining specialist Weir Group saw group original equipment orders rise 15 per cent in the quarter, with the first positive original equipment orders growth since the first quarter of last year.

The FTSE 100 firm’s cost-cutting programme is progressing at pace, with £19m of cumulative savings brought in so far, it said in a quarterly trading update.

This has left it “firmly” on track to deliver £60m in savings by 2026, it added.

In August, the group won a £53m contract for the Reko Diq copper-gold project, a 50 per cent owned greenfield development by Barrick.

Located in Pakistan’s province of Balochistan, the copper project is targeting first production in 2028 with an estimated mine life of over 40 years.

In addition, Weir secured orders for £25m from Moroccan state-owned phosphate rock miner OCP in its greenfield phosphate projects.

“We are capitalising on growing interest for our sustainable solutions with major orders received for the Reko Diq project and the OCP expansion as well as good momentum on brownfield projects, said Weir Group CEO Jon Stanton.

“These orders demonstrate Weir’s mining technology leadership and our unique opportunity to provide transformative solutions for sustainable mining as the energy transition gathers pace.”

Weir retained its 2024 guidance of growth in revenue and operating profit, with an 18 per cent operating margin expected and free operating cash conversion of between 90 to 100 per cent.

Shore Capital analysts Akhil Patel and Tom Fraine praised the firm’s “greater resilience, lower volatility, higher earnings quality, 300bps+ operating margin improvement/expansion, improved cash generation metrics and a stronger balance sheet”.

“We believe the current valuation does not reflect the higher-quality business” after its disposal of its oil and gas business, the analysts added.

“Aftermarket orders were in line with our expectations and reflect high levels of activity in core mining markets with the mine specific factors seen in H1 moderating,” added Stanton.